Take from the Poor to Give to the Rich: Why Fee-For-Service is No Longer the Answer

When I started on this journey to becoming a physician, I expected, in the end, to be rewarded. Not monetarily, though that is obviously part and parcel with any job, but with the privilege of building relationships with patients that lead to a level of trust and respect that remains rare among human interactions. The years of training and personal and financial sacrifice are all made worth it in the moments that I find myself making a true connection with a patient, especially in my home state of Tennessee where many patients presenting to the hospital have an ingrained distrust of “the system.”

Increasingly however, all that hard work means very little in the face of a growing number of difficulties that leave physicians feeling frustrated and even powerless and compromise and undermine the joys and fulfillment of the practice of medicine. These include convincing insurance companies to cover much needed treatment for patients, and being paid via a fee-for-service system, which corrupts the medical practice. This is not to mention the sheer number of different insurance plans that exist that physicians are expected to know in detail. In many parts of the country, professional satisfaction among physicians has sunk to an all-time low, with half of all practicing physicians report discouraging their children from following in their professional footsteps.

Most physicians today are paid based on the number and complexity of the services they provide, via a fee-for service reimbursement scheme that fails to recognize the bigger picture of what a physician is doing for their patient. This approach and the associated administrative burden accounts for much of the frustration felt by physicians today.

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This reimbursement model hails from the time of Hippocrates and has continued essentially unchanged through the centuries. Until about the mid-twentieth century, the problems patients experienced were relatively simple and, more importantly, the range of therapeutic interventions were much fewer and less complex. In addition, it has only been in the last several decades that we have come away from medical care being paid directly by the patient, without a third party intermediary.

Today, our population is more obese and much older, with major chronic illnesses requiring ongoing therapy. Medical treatments are more complex, often requiring teams of physicians and/or expensive drug therapies or technology – with some medications costing hundreds of dollars per pill and multi-million dollar machines being used in surgical interventions, providing care for one patient can be in the tens if not hundreds of thousands of dollars. As a result, the total cost of American health care continues to rise at a rate much faster than the gross national product. And while doctors bear some accountability for this increase in health care expenses, many feel like victims of a system gone wrong.

Given the recent mergers of Aetna-Humana and Anthem-Cigna – leaving  consumers with only three giants to choose from – we can expect little to change. As the fee-for-service system continues with the Affordable Care Act, we can see an adverse effect both on patient care and physician satisfaction. Insurance companies already prohibit about one-third of providers from participating in state health exchanges, leaving an uneven patchwork of coverage. And for those doctors who complain that their payments barely cover office expenses, insurers choose to threaten them with exclusion from their already narrow networks.

What happens next is not surprising: as reimbursement per patient declines – especially for primary care specialties that are less procedure-heavy (i.e., pediatrics, internal and family medicine) – doctors have no choice but to see more patients every day and spend less time with each. The end result is the loss of that mutually rewarding doctor-patient relationship and a deterioration in the quality of care provided. And at the end of the day, insurers are always able to increase premiums and decrease the fees they pay to providers in order to maintain their profits.

To add insult to injury, physicians are often required to obtain permission from insurance companies for more expensive tests and procedures leading to unnecessary delays in care and an increased administrative burden. Indeed, the size of clerical staff in many private offices (and hospitals, of course) outnumbers the people involved directly in patient care due to the need to have employees who file claims and do billing.

Patients insured through government programs also pose a challenge. As both the federal and state governments face budget issues they look to not only health care, but also housingand education to cut costs – all areas that affect patients in fundamental ways. And with health insurance covering less than it has in the past, patients in both the private and government insured camps must pay increasingly more out of pocket before their insurance plan kicks in. In fact, monthly premiums of private insurers have risen by 62% from 2003 to 2011. For many patients, this is simply not feasible. Physicians are consequently caught in the middle of patient and insurer, trying to pave a way for the care these patients desperately need. Often, the only option is a suboptimal alternative.

This barrier to providing the proper care is especially disheartening to physicians when they read that insurance companies use almost a quarter of patients’ premiums for administrative costs and return to shareholders – about 26 cents per premium dollar, to be exact.

Fixing these problems is something that will take time but needs to be tackled head on. Doing nothing is no longer an option. And despite its efforts to control health insurers with rate review and the 80/20 rule, the Affordable Care Act doesn’t seem to have slowed down company profitsone bit. So what can be done? Well, what’s already been done many times over in countries around the world and has been shown to contain costs – implement a single-payer system that would immediately cut billions of dollars in hospital administrative costs per year and create increased bargaining power to control service and drug costs. In the long-term, single-payer systems have been proven to be able to control health spending more effectively.  Take our neighbor to the north: Canada and the US both spent the same on health care until Canada began its universal Medicare program in 1966. Since that time, US health spending has grown twice as quickly as that of Canada, with the US now spending twice as much as Canada per capita on health care.

Without a doubt, the single-payer proposal will continue to be difficult to implement and various health care system stakeholders will reject and discount the idea. But if physicians are to provide the best health care possible to their patients, we need to be willing to keep fighting for the improvement of our broken system. Only after the needed changes are made will we perhaps be able to find our way back to that doctor-patient relationship we signed up for.


Marieme Mbaye is a fourth-year medical student at University of Tennessee Health Science Center College of Medicine.